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The BBC has learned that the number of fake pound coins in circulation may be as many as one in 20.
The figure is twice the official estimates.
Criminal gangs have dramatically increased their output of counterfeit £1 coins in the past year, pumping millions of fakes into the economy and threatening to undermine public confidence in the money supply.
Sampling by the Royal Mint of coins in circulation across Britain has found that the number in circulation rose by 27 per cent during 2008, raising the amount of sham coinage to £37.5m – or one £1 coin in every 40 – the highest since the coin was introduced in 1983.
In 2002, one in 100 £1 coins was a worthless fake and in 2007 one in 50. Royal Mint officials are considering launching a public information campaign to warn the public how to spot the fakes...
...Technically any person handing one over is breaking the law, meaning that millions of people are unwittingly committing a crime every year, but many of the fakes closely reproduce the metallic compound used by the Royal Mint, making them hard to detect by bank counting machines.
The rise in forgeries, revealed in documents obtained by The Independent, prompted a warning from an expert that their prevalence could undermine confidence in the money supply.
..."If the public starts losing confidence in coins and notes, you get people refusing to take them," said Robert Matthews, who retired as Chief Assayer of the Royal Mint in 2002. "It could damage a lot of small shopkeepers doing lots of small transactions."
Five years in jail are waiting for the counterfeiter who was able to make 14 million 1 pound coins. It was one of the biggest coin-making operations, according to the police.
The name of the 37-year old counterfeiter is Marcus Glindon. The former engineer started running his illegal business in a workshop after losing his job. Although the forgery brought him about 300,000 pounds, his lifestyle did no show any signs of wealth, the police said.
Inside his workshop in Enfield, North London, police found enough machinery to produce fake coins on a large scale. Police also discovered copies of the dyes Glindon used to imprint 1 pound coins. After being arrested the counterfeiter admitted that he had been minting fake coins for seven years.
Marcus Glindon, who is also the father of two kids, mentioned that he produced coins alone and that he received orders from two men who called themselves "Tom" and "John". The two men would bring materials to his workshop. Glindon used those materials to make completed coins as well as blank coins.
In seven years he was able to make 14 million coins. Among them there were 2.5 millions stamped coins ready for being used for buying things. The coins have not been recuperated.
According to Glindon's calculations, at one stage he was producing daily 12,000 pound coins. Then the finished coins we passed to his accomplices. The two paid him weekly 2000 pounds...
Originally posted by Merriman Weir
What a fantastic reason to suggest now is the time to withdrawn physical currency! 'There's too much counterfeit cash about, it's too easy to make and too easy to get passed on - so we're banning it. If it's not coins, then it's fake notes. From now on, it's going to be cards only. Special cards. They've got special ID on them and everything. It's all safe, don't worry about it. Go back to sleep'.
Former Queen's Assay Master Robert Matthews - a leading authority on fake coins - is also worried.
He said: "The Mint is really trying to play down the problem and keep it as low-key as possible.
"They've not produced any publicity material for banks etc to tell us how to differentiate between real and fake coins.
"They don't want to undermine public confidence in the coins, you might get people refusing to take them."...
...The problem is that finding the fakes is not in anyone's interests.
As soon as a coin accepted in good faith is found to be counterfeit, it is immediately rendered worthless - and in addition attempting to pass it on is an offence.
Mr Brown said: "Provided the coins are just being accepted and passed through the system nobody cares. It's only when people start rejecting the coins that people come to us."
Although it says little in public, the Royal Mint is taking action - testing far more coins than before.
It redoubled its efforts last September after the BBC revealed around one in 50 pound coins was fake.
In the last quarter of 2008 the Mint removed 270,000 fake pound coins from circulation compared to 97,000 for the whole of the previous year.